sbin spread

#1
Hello experts,

Kindly let me know what do you think about initiating a reverse iron butterfly in SBI options..

For example
Current spot price 2648

Buy put & call 2640 @debit =70+47.60=117.60
Sell put 2620 @ 34.20
Sell call 2660 @ 57.40 total credit =91.60

Net debit =26
Break evens =2666 & 2614


What do you guys think about it?
 

comm4300

Well-Known Member
#2
Hello experts,

Kindly let me know what do you think about initiating a reverse iron butterfly in SBI options..

For example
Current spot price 2648

Buy put & call 2640 @debit =70+47.60=117.60
Sell put 2620 @ 34.20
Sell call 2660 @ 57.40 total credit =91.60

Net debit =26
Break evens =2666 & 2614


What do you guys think about it?
here's what i understand:

your net debit is 26, while your max profit at expiry would be 20 max.
 
#3
Thank you very much for the reply.

Yes..the debit is more than the possible profit.but how about the probability of profit.sincemthe voatality of the scrip is high the chance for the price moving favourably ,isnt it more?
 
#5
Is that so? I was under the impression that the profit potentialmwould be (2660-2620)-26= 14
Correct me if am wrong...
Thanks in advance
 

toughard

Well-Known Member
#6
Hello experts,

Kindly let me know what do you think about initiating a reverse iron butterfly in SBI options..

For example
Current spot price 2648

Buy put & call 2640 @debit =70+47.60=117.60
Sell put 2620 @ 34.20
Sell call 2660 @ 57.40 total credit =91.60

Net debit =26
Break evens =2666 & 2614


What do you guys think about it?
Please see your pay off chart and data as per your inputs

 

toughard

Well-Known Member
#7
just do a small change and see the magic...

Reverse you put strikes
see this ....




let me know if you need any clarification...
 
#8
Hello toughard,
Thank you for th response.Am not sure if i understood it correctly.As per the excel, is it suggesting that if i had changed the put strikes, 3200 would have been the minimum profit that could have been locked in by expiry.?
 

toughard

Well-Known Member
#9
Hello toughard,
Thank you for th response.Am not sure if i understood it correctly.As per the excel, is it suggesting that if i had changed the put strikes, 3200 would have been the minimum profit that could have been locked in by expiry.?
you are right but not min its max on down side while 8200 max on up side:thumb:
 
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#10
Super cool.And also ismthe sheet suggesting that there would not have been any loss if the positions were reversed?is the time decay also considered in this ....?
 

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